U.S. labour costs rise in 4th quarter

Compensation costs have risen 2 per cent over last 12 months

By Reuters

01/31/2014|hrreporter.com|Last Updated: 01/31/2014

WASHINGTON, D.C. (Reuters) — U.S. labour costs rose in the fourth quarter, with the biggest jump in wages and salaries since 2009, but there was still little sign of wage inflation amid slack in the jobs market.

The Employment Cost Index, the broadest measure of labuor costs, increased 0.5 per cent after rising 0.4 per cent in the third quarter, the Labor Department said on Friday.

Economists polled by Reuters had expected labour costs to increase 0.4 per cent. In the 12 months through December, compensation costs rose two per cent.

During periods of strong economic growth, the U.S. central bank closely monitors the index for signs of wage inflation. The absence of wage inflation is keeping overall price pressures in the economy subdued.

This means the Fed could keep interest rates near zero for a while even as it is reducing its monthly bond purchases. Wage growth is, however, expected to gain traction later this year as the economy attains a sustained pace of stronger growth.

Wages and salaries, which account for 70 per cent of employment costs, increased 0.6 per cent in the fourth quarter. That was the biggest increase since the third quarter of 2009. It followed a 0.3 per cent advance in the third quarter.

They were up 1.9 per cent in the 12 months through December and up from 1.6 per cent in the same period in 2012.

Benefit costs increased 0.6 per cent in the fourth quarter after rising 0.7 per cent in the July-September quarter.

They rose 2.2 per cent in the 12 months through December after advancing by the same margin in the same period in 2012.